US GDP Data Supports The Pound
US GDP data this afternoon came out at 2.2% showing the US economy is still on the road to recovery but the figures were significantly down on the 3% growth seen last quarter. The news has seen sterling push on against the Dollar rising to a near 8 month high offering a great opportunity to buy Dollars with the interbank rate hitting over 1.6250. Higher than expected consumer spending could not offset a slight cut back in business investment in the US and the data provides ammunition for both Republicans and Democrats in an election year as it is not a strong indication of growth, but does provide some evidence of economic recovery.
The global confidence helped sterling claw back some of this mornings session losses against a range of currencies and left the pound relatively unchanged from the market open (except against the USD). The next big indicator will be US Non Farm Payrolls this time next week and will be a sign of how many jobs have been created in the US and will be key to presidential election campaigns as well as global confidence and GBP USD rates. Despite entering recession the pound is presently at a 20 month high on a trade weighted basket of currencies and my suspicion is this may even rally a touch further next week but I would be surprised if we see substantial further gains until the next Bank of England meeting is out of the way which is a long time to wait in currency terms.
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